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2024 (6) TMI 1049 - AT - Income TaxIssues involved: Appeal against Commissioner of Income Tax (Appeals) order on rectification of processing under section 143(1)(a) of the Income Tax Act, 1961 for Assessment Year 2018-19 by a charitable trust. Analysis: 1. Representation and Ex Parte Hearing: The appellant, a charitable trust, filed an appeal against the order of the Commissioner of Income Tax (Appeals) contesting the rectification of processing under section 143(1)(a) of the Income Tax Act, 1961. Despite multiple opportunities provided, the appellant did not appear for the hearing, leading to an ex parte proceeding. The Tribunal proceeded with the hearing in the absence of the appellant. 2. Income Computation of Charitable Trust: The main issue in the case was the computation of income for a charitable trust under section 11(1)(a) of the Act. The appellant had claimed a deduction of 15% of the gross receipts for charitable purposes. However, since there was no application of funds for the remaining 85% of the gross receipts, the deduction was disallowed. The Tribunal upheld the adjustment made by the Revenue, limiting the income of the trust to 85% of the total income as per the provisions of section 11(1)(a). 3. Tax Rate Application: Another significant issue was the tax rate applied to the trust. The Revenue had applied the maximum marginal rate, which the appellant contested. The Tribunal found that the application of section 167B prescribing the maximum marginal rate was incorrect in the case of a charitable trust. The tax rate was to be computed as per the normal rates applicable to Associations of Persons, as clarified by the Board's Circular No. 320. The Tribunal held that the tax rate issue was a legal matter and decided in favor of the appellant. 4. Decision and Conclusion: The Tribunal allowed the appeal of the assessee, ruling that the appellant shall be assessed at the returned income of Rs. 87,430. The Tribunal concluded that the rectification order was incorrect in disallowing the deduction claimed by the appellant and in applying the maximum marginal tax rate. The decision was pronounced on February 29, 2024, under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963.
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